Documentof The WorldBank FOROFFICIALUSEONLY 48692 PROJECTPAPER ONRESTRUCTURINGTHE URUGUAY:TRANSPORTINFRASTRUCTUREMAINTENANCEAND RURALACCESSPROJECT February15,2007 SustainableDevelopmentDepartment LatinAmerica and the CaribbeanRegion UR-TransportInfrastructureMaintenance andRuralAccess Project (Loan 7303) Project Paper A DATA SHEET Date: February 15,2007 Task Team Leader: Jorge RebelolAndres Country: Oriental Republic ofUruguay Pizano Project Name: Transport Infrastructure Sector Manager: Jose LuisIrigoyen Maintenance and Rural Access Country Director: Axel vanTrotsenburg Colonia 1089, Piso 3, 11100, Montevideo, Uruguay 2 B Introduction 1. This Project Paper seeks the approval of the Vice President to introduce changes in the Uruguay - Transport Infrastructure Maintenance and Rural Access Project (the Project)- Loan7303 - P057481, and any accompanying amendments to the Project's legal documents (the Loan Agreement and Implementation Letter). The proposed changes reflect the inclusion o f rehabilitation o f new roads and reconditioning o f bridges in Schedule2 to the Loan Agreement and Annex C to the Implementation Letter, under the Corporacibn Vial del Uruguay's ( C W ) execution. The works includedhadbeen part o f the Forest Products Transport Project (the FPTP financed in part with Loan 4204) but were not completed due to a lack of fiscal space and consequent reduction inbudgetary allocations to the Ministerio de Transportey Obras Publicus (MTOP). As a result o f the proposed changes, new rehabilitation o f roads would be added and some reinforcing o f bridges would be replaced. These changes would be done while maintaining all the road rehabilitation and the bridge reinforcing on key international corridors that were originally included inthe design o f the Project. Section 4 o fthis paper provides details o f the roads addedandbridges beingreplaced. C BackgroundandReasonsfor Restructuring 2. Uruguay's economy depends very much on its road network for the movement o f goods and passengers since other modes such as rail cannot deliver the same level o f service. The road network also plays a very important role inthe facilitation o fUruguay's exports and inattracting foreign direct investment inprocessing plants for products such as forest products. In the last 15 years, the country benefited from the Bank-financed Second Transport Project (STP) and the FPTP, which contributed to the increase in the quality o f road corridors through rehabilitation and maintenance, including through private sector schemes such as Contrato de Rehabilitacion y Mantenimiento (CREMA) contracts. In 2005, Uruguay signed a new loan to finance the Project, which is the subject ofthis amendment. 3. Duringthe last 15 years, the MTOP embarked on a major effort of modernizing the transport sector that included (i)reorienting the functions o f transport agencies towards policy making, planning, regulation and control, rather than execution activities; and (ii)allowing for increased private sector participation in the sector through outsourcing and concessions. Onthe whole, the reforms have succeededinimproving the quality o f transport infrastructure and services, as may be measured by the condition of the road network and its weathering o f the crisis and by the important improvements in port productivity and costs. 4. The Republic of Uruguay's (RoU) road management strategy i s based upon the use o f performance based instruments, including: (i)private sector participation mechanisms, such as road concessions, performance-based maintenance contracts, and maintenance by micro-enterprises; (ii)the concessions with C W (former 3 Megaconcession), an innovative scheme for channeling funding towards the performance-basedmaintenance o f key sections o f the network; and (iii) anoutput-based maintenance scheme for departmental roads. 5. The Project was approved by the Board on June 9,2005 andbecame effective on July 4, 2005. The Project's Development Objective (PDO) i s to upgrade the country's transport infrastructure to a condition that facilitates the transportation o f freight and passengersat a cost-efficient level of service. To achieve the PDO, the Project intends to rehabilitate key transport links, remove existing bottlenecks, arrest any further deterioration o f infrastructure due to budgetary constraints and improve infrastructure management and safety. Total Project cost i s US$ 100 million o f which the Bank is financing US$70million through Loan 7303. 6. The Project i s performing in a satisfactory manner. Based on the latest supervision mission carried out in November 2006, the achievement o f the PDO was rated marginally satisfactory, essentially due to delays in implementation. The implementation of the Project was also rated marginally satisfactory, due mainly to budgetary constraints requiring the administration to wait for the approval o f the new budget in March 2006. There are no audits outstanding. Finally, the Project is still at an early stage but has already disbursedabout US$ 10.87 million (14.5% o f the loan). The implementation of the Project i s proceeding marginally slower than planned but the preparatory work i s in line with the main objective o f improving cost efficiency o f transport. 7. The proposed restructuring would enable the completion o froad andbridgeworks that were part of the FPTP but could not be completed before loan closure inApril 2006, because o f severe fiscal space restrictions that constrained the MTOP's budget. These budgetary constraints were triggered by the compliance o f targets agreed between Uruguay and IMF, as part o f a program to improve the fiscal situation o f the country which was highlyaffected bythe Argentine macroeconomic crisis. One direct implication i s that several capital investments planned could not take place or were delayed due to uncertainty in budget allocation, as priority was given to the maintenance o f existing roads which were key to the economy. Loan 4204 was amended to help the country deal with the crisis. As a result, some road and bridge works initially planned under Loan 4204 could not beundertakenbefore the approval o fthe newbudget inMarch2006. D Proposed changes 8. The Bank received on August 30, 2006 a request from the MTOP to modify the Schedule2 to the LoanAgreement, Annex C to the Implementation Letter andupdate the procurement plan referred to in the Loan Agreement, in order to substitute road and bridge works by others initially planned inthe Loan4204. 4 Description 9. The proposed changesinthe Project's design have highpriority and are consistent with the original PDO. These changes consist of replacing a number of sub-projects includedin Schedule 2 to the LoanAgreement andAnnex C to the Implementation Letter with roads that had originally been part of Loan4204 andwere not completedbecauseof budgetary restrictions. The works initially plannedunder the LoanAgreement and being replaced will be undertaken later in the period 2005-2010 by the Borrower using other sources of funding. 10. The original Project consists o f 5 components, involving investment in road rehabilitationand maintenance, bridge reinforcement, transfer terminals, transport safety andinstitutionalstrengthening.The original Project's componentsaredescribedbelow: Table 1:Project sescription Component Description Amount financed by Project US$ million A.l DNV (a) rehabilitation works consisting o f reinforcing the 8.4 managedroutes pavement structure of about 35 km o f roads on national route 3 and route 18 A.2 CVU (a) rehabilitation works consisting of reinforcing the 27.6 managedroutes pavement structure of 24 km o f roads on national andbridges route 1, 2 and 3 and (b) carrying out of reconditioning works consisting o f strengthening, widening or replacing existing structures o f 20 bridges located on national Routes 1, 5, 6, 7, 8, 21, 26,28,30 and200 A.3 Transfer Minor infrastructure rehabilitation works in several 8.6 terminal terminals rehabilitation BRoad Rehabilitation and maintenance works in six road 24.85 rehabilitation and sub-networks covering an estimated 981 km o f maintenance national roads through performance-based CREMA contracting- contracts. CREMA contacts C Departmental Departmental roadrehabilitationandmaintenance 20.6 road rehabilitation and maintenance DTransport (i)implementinglow-cost measures to increaseroad 3.8 infrastructure safety, including roads passing through urban areas, safety program and (ii)acquisition and installation of road safety elements ----__-____ ETransport (i) MTOP inthepreparation ofitstransport assist 5.8 5 sector infrastructure plan for years 2005-09, (ii) training for management and capacity building and provision o f new tools, (iii) institutional strengthening infrastructure management, (iv) building assisting MTOP in the preparation o f an urban transport program, and (v) feasibility studies o f the Montevideo ring-road and access roads projects 11. The proposed changes will update Part A.2 of the Project according to the Loan Agreement, which consists o f the rehabilitation of CVU managedroutes and bridges and will not modify any o f the other components. Part A. 2 of the Project was expected to reinforce the pavement structure o f about 24 km o f roads and to strengthen, widen or replace the existing structure o f 20 bridges. The proposed changeswould replace some o f the works initially planned under Part A.2 o f the Project by other rehabilitation o f CVU managed routes and bridges and would result in the rehabilitation o f 91.2 km o f roads, andthe reconditioning of 5 bridges for this component. The proposed changes will result inanincreaseof67.2 kmofroadsbeingrehabilitated anda decrease of 12bridges being reinforced under component A.2. The Project will finance up to US$ 27.6 million o f works under component A.2 (amount which excludes the US$ 4.5 million in works already financed by Loan 4204 from the total cost of the works listed under the proposed Part A.2 o f the Project). The total amount o f the Loan will remain o f US$ 70 million, as initially approved bythe Board. 12. The roads and bridges under Part A.2 as initially described in the Implementation Letter are: 1 Arroyoy o ~ r r o Sauce Bridgereconditioning 0.71 0.7 I 1 II ArrovoMinuano Arrovo Minuano II Newbridge New bridge 0.4 Y 1 Arroyo Riachuelo New bridge 8 Arroyo Sarandi Newbridge rn 9) 5 Rio Yi Bicyclebridge I 3 I 0.3 I 5 A. Villasboas Reinforcement 5 A. Molles Reinforcement 5 Cda. Lazorra Reinforcement 0.1 6 A. Canelon Grande New bridge 0.2 6 . 6 A. Tala Widening andreinforcement 7 A. FraileMuerto Newbridge 21 A. LasViboras Newbridge 26 Cda. Sin nombre Wideningandreinforcement TotalRoadsandBridges(US$ million) $27.6 13. Route 1 is maintained as in the original Project, with the same sections being rehabilitated under two different contracts. The bridge works initially planned on Route 1 (Arroyo Sauce, Arroyo Minuano, and Arroyo Riachuelo) and described in Table 2 were added to the road rehabilitation contracts on Route 1, described in Table 3. As a result, the total number of bridges beingreinforced by the Project is 8 (5 inthe CVU-managed bridges section and 3 within the CW-managed roads section for Route 1). 14. The road rehabilitation works on Routes 1, and 3, originally planned under Part A.2 o f the Project have not beenmodified, but additional road sections to be rehabilitated on Routes 8 and 11 were added. As a result o f the addition o f new road sections to be rehabilitated, some o f the original bridgerehabilitation and construction were eliminated. The proposed changes would result inthe following works under Part A.2 of the Project, to the extent they have not already been financed under Loan4204: Table3: Corn onentA.2 Ai :erRestructurin Financed Total Route I Forest 1 CVU-ManagedRoads(includingbridgeworks on Route 1) I Ruta54 (138km000)-Ruta 1 22 Additional lane 10.2 $ 8.2 0% $ 8.2 7 Ruta2-Ruta 54 1 (138kmOOO) Additional lane 10.8 $ 6.3 0% $ 6.3 Plantaurbana de 3 Young Reinforcement 3 $ 0.5 0% $ 0.5 Rio Cebollati-Ao. 8 Piraraja Rehabilitation 15.3 $4.1 0% $4.1 Ao. Piraraja- 8 , 235kmOOO Rehabilitation 12.6 $3.5 0% $3.5 Ecilda Paullier- , 11 Juan Soler Rehabilitation 25.6 $ 3.3 94% $ 0.2 San Jose-Villa TotalRoadsandBridges(US$ million) $32.0 $4.4 $27.6 15. The main impact o f the proposed changes will result in some bridge works not beingundertakenand a larger number ofkilometers of international corridor roadsbeing rehabilitated. The additional number of kilometers of roads rehabilitated is 67.2km and the number ofbridges reduced i s 12.No other components are affected. Table 8 Pasaje Sup. Con Santin acc CRossi Overpass 2 Pasaje Superior (a determinar) Overpass 2 16. The proposed changes will result inanupdate of the Project's physical outputs for Part A o fthe Project, andthe outputs for the other componentsremain unchanged. Tab intainedto standards under CREMA- ComponentD kmofroadsthat havepavement markingsimprovedto Mercosur standards 450 km 450 km I according Additional number o fkmwith signals to Mercosur standards 800km 800km 9 number o fkmilluminatedunder the project 13.3 km 13.3 km ImplementingAgencies 17. The proposed modifications will not change the agencies responsible for implementation. The CVU remains the implementing agency for the works initially financed by Loan 4204 and included in the Loan Agreement. The CVU was responsible for the implementation of the works initially plannedunder Part A.2 of the Project, which i s the only component impacted by the proposed changes. Financing mechanism 18. The financing mechanism will not be changed following the proposed modifications. The Project is financed through a Specific Investment Loan (SIL) o f US$ 70 million, under FSL terms. The financing planremains the same, as the works initially plannedunder component 1 (b) andbeingreplaced were expectedto be initiated in2006 and2007, which is the same timeframe as the works beingincorporated from Loan4204. FY 2007 2008 2009 2010 2011 Annual 24.60 21.30 8.50 3.40 1.60 Project's Outcomeand Ouqput 19. The proposed changes will not modi@ the PDO and associated outcome target and outcome indicators. The PDO's associated outcome target is that "basic transport infrastructure is maintained in a condition that facilitates the movement o f freight and passengersat a cost-efficient level of service by arresting any further deterioration due to fiscal restrictions, and ensuring the preservation o f existing infrastructure assets in the long term". The PDO's associated outcome target and indicators are maintained as describedinthe Implementation Letter (see section 6 for details). 20. The results indicators for each component o f the Project will remain the same. The only results indicators whose value could be impacted by the proposed amendment are those for Part A.2 o f the Project: (i) roughness (IRI) and road condition (IES) average of targeted International Corridors (IC), (ii) transit o f trucks loaded up to Mercosur standards is permitted along Route 8, and (iii) o f national roads compliant with km Mercosur standards. However, since the restructuring includes additional roads to be rehabilitated, therefore the outcome indicator values can be expected to be higher than originally envisaged. The bridges that have been eliminated from the original project do not negatively impact the route 8 outcome, as the bridgeoriginally includedinthe Project on Route 8 hasbeenmaintained. 10 21. However, the Project's physical outputs relatedto the first component will change as the number o fkm o f roads rehabilitated under Part A o f the Project will increase from 143.6 km to 210.8 km and the number o fbridges beingreinforced will decreasefrom 20 to 8. 22. Overall the impact of the restructuring should facilitate and improve the attainment of Project objectives and outcome targets. The impact o fthe proposed changes on the achievement o f the PDO, outcome indicators, and output i s detailed insection 6 o f this Project Paper. The list of outcome target and indicators i s described in Annex 1 and 3. Project cost andfinancingplan 23. The Project will not finance the portions o f the works already financed under Loan 4204 and will not change the cost o f Part A.2 of the Project. As shown inTable 3, some works (2 road rehabilitations on Route 11and the widening and reinforcement o f a bridge on Route 5) were already financed partly with US$4.4 million of Loan4204. The total cost o f the proposed works listed under Part A.2 (including works already financed with Loan4204 under the FPTP) is US$ 32 million, resultinginUS$ 27.6 million being financed under the Project. Out o f this amount, Loan 7303 will finance US$ 17 million, as described inTable 7, and the Borrowerwill provide the remaining US$ 10.6 million. 24. The Project total cost and financing plan will not be modified by the proposed changes. The changes will only modify Part A.2 o f the Project and will not modify its cost. In addition, the size o f CREMA contracts, consisting o f rehabilitation and maintenance o froads, canbe adjusted ifneeded to meet the budget o f the component. As a result, the costs o f the Project, individual components and subcomponents remain the same as approved by the Board in April 2005. The amount in each category o f the disbursement table inSchedule 1to the LoanAgreement does not change andremains the following: Category Amount o f LoanAllocated US$ I (4) Front-end fee I 350.000 I (5) Premia for Interest Rate Caps and 0 Interest Rate Collars 11 (6) Unallocated 7,880,000 Total 70,000,000 Disbursementand Financial ManagementArrangements: 25. The current disbursement and financial management arrangements will not be modified following the proposed changes. The implementation agency for the works initially considered under Loan 4204 (CVU) i s the same as the agencies responsible for implementation o f Part A.2 o f the Project. The amendment would be effective as o f January 1, 2006, so that the expenditures linked to the proposed changes may be recognized as o f Jan 1, 2006. The disbursement and financial management arrangements will remainas those describedinthe Loan Agreement, and the new works under Part A.2 in the amended Loan Agreement will only be carried out as part of the Project to the extent they were not already financed under Loan4204. Procurement: 26. There will be no changes in Schedule 4 to the Loan Agreement and an updated procurement plan including the proposed activities was submitted to the Bank by the Borrower. The updatedprocurement planwas reviewed by a procurement accredited staff and clearedbythe Sector Manager. The procurement risk was rated as low inthe Project Appraisal Document (PAD) of the Project, following the assessment o f procurement capacity o fthe implementing agency. The procurement o fthe works to be includedinthe Project will be done inaccordance with May 2004 World Bank's procurement guidelines andas providedinSchedule4 to the LoanAgreement. ClosingDate 27. The closing date o f the project will remain at July 31, 2011, after which an ICR will beprepared. E Analysis 28. The proposed changes do not modify the original economic and financial aspects o f the Project as appraised. The roads being included inthe Loan Agreement were filly appraised (including economic and social) for the Loan 4204. The economic evaluation of the impact of the new roads using the Highway Design and Maintenance Model (HDM)gave the same results as during appraisal. A new HDMwas runfor the network after restructuringandthe economic rate o freturnis the same. 29. The proposed changes will not result in outcome being counted twice. The fiscal restrictions that affected the Loan 4204 did not prevent the Project from reaching its PDO. The roads that would be included inthe Loan Agreement were not completed and not included inthe ex-post evaluation o fthe outcomes o fthe Loan4204. The inclusiono f the works from the Loan4204 does not affect the economic impact o fthe Project. 30. The new works under Part A.2 o f the Project will only be carried out as part ofthe Project to the extent they were not already financed under Loan4204. 12 31. The compliance o f the additional works with Bank's social safeguards was reviewed and cleared by SAT. An updated resettlement framework and a resettlement planfor the proposed Part A.2 (a) (vii) of the Project was submitted by the Borrower to the Bank.The Resettlement Plan (RP) andthe Resettlement Framework (RF) will replace Annex G to the Implementation Letter if this amendment i s approved. The works to be included do not involve resettlement but some land acquisitions already took place for Route 5 and Route 11. SAT reviewed the RF and RP for road segments on Routes 5 and 11 and confirmed that "The Resettlement Policy Framework as well as the specific Resettlement Plans for expropriation o f agricultural lands required for road rehabilitation works on Routes 5 and 11demonstratecompliance with the Bank's OP 4.12 (Involuntary Resettlement) Policy. The Amendment to the Loan Agreement includes appropriate references to OP 4.12, the Resettlement Policy Framework and the requirement o f ResettlementAction Plan". 32. The compliance o f the additional works with Bank`s environmental safeguards was reviewed and cleared by SAT. The following documents were provided to and reviewed by SAT: (i) procedures and criteria for the environmental screening o f subprojects, such as those to be financed through the restructured Project, (ii) measuresto ensure mitigation o f all potential impacts identified through environmental screening, including specific Environmental Assessments for subprojects with significant impacts, (iii) application o f environmental guidelines for construction and operation, which are referenced in bidding and contract documents, (iv) arrangements for environmental supervision o f contractors, and (v) environmental supervision o f the project by the PIU. Inaddition, institutionalstrengthening hasbeenprovidedto the implementing agency to strengthen its environmental management. SAT agreed that "the strategy to manage impacts related to road rehabilitation and bridge reconditioning was appropriate from a safeguardsperspective". F ExpectedOutcomes 33. The proposed changes will not affect the PDO, its outcome target and outcome indicators, as the activities addedare hlly inline with the original Project. 34. The proposed changes will not modi@ the expected Project's development outcome as the associated outcome targets (in reference to those initially set out in the Implementation Letter) will still be met. The outcome indicators that would measure the achievement o f the PDO are: (i) the percentage o f the road network below the optimal level o f service, (ii) percentage o f the road network in bad condition as determined the per the Road Condition Index, and (iii) value of the road assets maintained equal or the above the average level. The proposed changes will result inan increaseinthe number o f kmofroadsbeingrehabilitatedbythe Project, thus contributing evenmore to the quality o f the road network. The works under Part A.2 o f the Project consisted originally o f the rehabilitation of 24 km o f roads. With the proposed changes, a total o f 91.2 km of roads will be rehabilitated under Part A.2. The outcome indicators for the achievement o f the 13 PDO are all road-related, which means that they won't be impacted by the reduction in the number o fbridges works beingfinanced by the Project. 35. The proposed changes will not modify the achievement o f the Project's results indicators for individual components, as the rehabilitation o f roads that was initially included in the Project is maintained, as well as the bridge works on key international corridors. The changes will impact only Part A.2 o f the Project, which outcome target i s that "targeted national roads and bridges on international corridors (managed by DNV andCVU) have adequatelevels of service and are upgraded to Mercosur standards". The first associated result indicator - the average roughness (IRI) and road condition o f targeted International Corridors - will not be negatively impacted, as (i) proposed the roadrehabilitation (on routes 1, 8 and 11) i s on international corridors, (ii) the number o f km beingrehabilitated on these corridors increases as a result of the proposed changes, and (iii) reinforcingofthe bridges on routes 1and 8 (international corridors) are kept. the The second result indicator - transit o f trucks loaded up to Mercosur standards i s permitted along Route 8 - will be met as the proposedroad rehabilitation on route 8 i s o f Mercosur standards and the construction of the new bridge on route 8 i s maintained. Finally, the third result indicator - additional km o f national roads are compliant with Mercosur standards - will bemet as the proposed roadrehabilitation on routes 1,8 and 11 will becompliant to Mercosur standards. 36. The proposed changes will not result in an increased risk o f a reduction o f the RoU's investment program in roads and will not result in modification o f the outcome targets. The proposed changes will allow the completion o f the road rehabilitation on Routes 8 and 11 that could not be completed in the FPTP. The rehabilitation works on Route 1 and 3, which were included in the original Part A.2 of the Project, will be maintained in the updated Part A.2 following the proposed changes. As a result, the proposed amendment won't impact the RoU investment program on Routes 1, 3, 8 and 11. G Benefits andRisks 37. The proposed changes will enablethe Borrower to complete works expectedto be financed by the loan Loan 4204 but that could not be completed before closing date due to fiscal space limitation. By completing the works, the Borrower will support exports o f forest products andother goods, as aresult o f a rehabilitatedroadnetwork. 38. Because the works to be included are not related to the Port o f Fray Bentos, the reputational risk to the Bank i s considered minimal. The initial request included the completion o f the pier extension that could not be finished under the FPTP. A Quality Enhancement Review on February 1, 2007 concluded that including such works would unnecessarily raise this risk, given that the Borrower could finance this investment o f US$ 7.1 million with its own funds. The Borrower agreed to drop its request to include FrayBentos inthe amendment. 14 39. The proposed changes do not increasethe level o frisk ofthe Project. There are no additional risks thanthose identified at appraisal that could jeopardize the achievement of the PDO and outcome targets. Risks such as institutional capacity and insufficient/untimely release o f counterpart funding have been already identified in the PAD o f the Project and mitigated through (i) performance indicators to monitor progress and(ii) fact that expectedworks are included inthe newlyapprovedbudget. the 40. Although the level o f risk does not increase as a result of the proposed changes, it was agreed that additional measures would be taken to monitor the financing o f the road network, to ensure that sufficient funds will be made available by the RoU from budget and other sources. As a result, yearly review of the availability and use of funds for the roadnetwork will be conductedbythe Bankduringsupervision. 15 Annex 1 Impact on output indicators related to specific components 2 3 Project end ComDonent 1 kmofnational roadsrehabilitated 40.6 119.3 210.8 underthe Proiect km km km 210.8 km Numbero fbridges reinforces and widened, or replaced underthe 2 5 8 Project bridges bridges bridges 8 bridges Component 2 kmofroads rehabilitated under CREMA-type 13 15 contracts km km 15km 15km kmofroads rehabillitated and/or maintained to standardsunder CREMA-type 512 981 981 contracts km km km 981km Component 3 kmofdepartmental roadsmaintained to satisfactory standardsunder the 0 9,000 9,000 9,000 km(2 Projects km km km years) ComDonent 4 kmofroadsthat have pavement markingsimproved to Mercosur 0 450 standards km O k m km 450 km Additional number o fkmwith signals accordingto 0 800 Mercosur standards km O k m km 800km numberofkm illuminatedunder 0 11,7 the project km km O h 13.3 km 16 Annex 2 Impactofpropc ed changeson PDOand outcome idicators PDO OutcomeIndicators ImpactofProposedChanges Basic transport Percentageo fthe roadnetwork The proposed changeswill ifnrastructure is maintained below the optimal level of service result inan increaseinthe total inaconditionthat Percentageo fthe roadnetwork in number ofkmbeing facilitates the movement o f badconditionas determined per rehabilitated incomponent 1B, freight andpassengersat a the Road Condition Index which will result inthe same cost-efficient level o f Value ofroadassets i s maintained or a better conditionofthe serviceby arresting any equal or above the averagelevel roadnetwork. The further deterioration due to rehabilitation o froads fiscal restrictions, and originally plannedbythe ensuringthe preservation Project havebeenmaintained o fexistinginfrastructure assets inthe longterm Intermediate Results for Component1 ResultsIndicators Impactof ProposedChanges Average roughness(IRI) androad Roads 1, 8 and 11 are all condition (IES) o ftargeted international corridors, and the International Corridors number o f k m s being rehabilitated on these roads increases as a result o f the proposed changes. The Targeted national roads and reinforcingbridges on routes 1, bridges on international and 8 (international corridors) (managedby DNV and arekept CVU) have adequatelevels Transitof trucks loaded upto Road rehabilitation on route 8 of service and areupgraded Mercosur standardsi s permitted i s of Mercosur standards and to Mercosur standards along Route 8 new bridge is maintained from Dreviousdesign Additional kmo fnational roads The proposed changes will are compliant to Mercosur result in the rehabilitation o f standards sections on route 1, 8 and 11, which are all of Mercosur Standards 17 Annex 3 Project's PDO Outcome Indicators Outcome Indicators Baseline Targ 35 YR YR YR YR YR YR 1 -2 3 4 -5 6 Cost Efficiency 9% for Percentageof the 11%for the Percentage of the road national roads flexible flexible network belowthe optimal belowoptimal level pavement pavement level of service of service is 16% network network for the flexible pavement network 15%for the and 20% for the 13%for entire total network the entire network network -- Arrestingfurther deterioration Percentage of the road network in bad condition as determined per the Road Condition Index 29.5% 25.0% (Indicede Estado de 25.0% ConservacionVial-IES) road assets Value of The value of National 4ctual value:US$ road Value of road Roadassets is 2004: US$2148 assets assets is at maintainedequal or million(0.65% reaches least 1% above the median of the 3elow median median above the theoreticalmaximum and Jalue) level median level minimum admissible values as defined per ECLAC's methodology 18 Annex 4 RoadCorridorsinUruguay Clasificacion Red Vial 19